The latest sanctions against Russia imposed by the United States took effect on Monday. The sanctions are linked to a nerve agent attack on a former Russian spy and his daughter in the United Kingdom.
CGTN’s Dan Ashby reports.
The financial heart of Moscow is used to waking up to sanctions, but the country’s currency could not hide the pain on Monday. The Rouble remained volatile as the U.S. banned its state banks and agencies from offering credit or aid to Moscow.
The new U.S. sanctions have devalued Russia’s currency and they are likely to hit Russia’s economic growth, but not catastrophically. Oil and gas sales continue to grow and most Russian analysts believe the country’s economy is strong enough to soften the sanctions’ bite.
“We have very strong fundamentals,” said Tatiana Evdokimova, the chief economist of Nordea Bank. “I mean, the level of sovereign debt is very low and the budget is in a good shape and we’re actually in surplus. External trade is also in surplus. So overall I think the economy will be able to cope with all that.”
The falling Rouble might even be a gift to some companies.
“If we see that the sanctions will lead to a lower Rouble, higher dollar, this will help us because we are exporting a lot of products which are quoted in dollars,” said Alexander Prosiviryakov, the Chief Investment Officer at Whitestone Capital. “So for every barrel of oil sold, we’ll get more roubles, this will make our economy more stable and we’ll have more money to spend on social means, so it’s good for our exporters actually.”
But the U.S. Congress is considering much tougher sanctions, which will include bans on buying sovereign debt and restrictions on Russian banks.
When similar sanctions first came into effect, Russia’s economy went into recession, and has only recently recovered. President Putin is already finding it hard to fund his election promises, and the latest round of sanctions might starve the Government of vital cash.